Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>WTR-CMI last week. In a down week for the market, with both the S&amp;P 500 and Russell 2000 declining 4.2% and 5.7%, respectively, 29 of the 30 stocks in our WTR-CMI Index likewise saw their prices fall 4.0%, with AVD being the only exception, appreciating 9.1% for the week.</li><li>YTD, the S&amp;P 500, heavily weighted toward tech and internet stocks, has increased 13.4%, while our WTR-CMI Index has increased 7.2%, outperforming the broader Russell 2000’s 3.2% rise, despite lithium stocks’ 50%- plus declines.</li><li>Recycled plastics market gaining acceptance. LYB announced the acquisition of German APK AG, a mechanical plastics recycler to bolster its circular economy and low-carbon credentials, while AVTN launched a pigment additive for plastics used in automotive plications made from recycled tires, as an alternative to carbon black, again aiming at helping its customers reduce their carbon impact while improving its own circular economy efforts.</li></ul>

WTR-CMI last week. In a down week for the market, with both the S&amp;P 500 and Russell 2000 declining 4.2% and 5.7%, respectively, 29 of the 30 stocks in our WTR-CMI Index likewise saw their prices fall 4.0%, with AVD being the only exception, appreciating 9.1% for the week.YTD, the S&amp;P 500, heavily weighted toward tech and internet stocks, has increased 13.4%, while our WTR-CMI Index has increased 7.2%, outperforming the broader Russell 2000’s 3.2% rise, despite lithium stocks’ 50%- plus declines.Recycled plastics market gaining acceptance. LYB announced the acquisition of German APK AG, a mechanical plastics recycler to bolster its circular economy and low-carbon credentials, while AVTN launched a pigment additive for plastics used in automotive plications made from recycled tires, as an alternative to carbon black, again aiming at helping its customers reduce their carbon impact while improving its own circular economy efforts.

Mat-Chem Notes - Weakness of Industrial, Ag, and EV Markets Leaves Few Options

<ul><li>WTR-CMI keeping pace with broad markets. YTD, the S&amp;P 500 has appreciated 18%, compared with the 9.5% appreciation for the broader Russell 2000, while our WTR-CMI Index has improved 8.4%, held back primarily by lithium stocks, which are off anywhere from 37% for ALB to 68% for PLL.</li><li>Two companies in our index, RYAM and ECL, have outperformed even the tech-heavy S&amp;P 500, coming off a challenging 2023.</li><li>Unfortunately, with both lithium and ag markets still under pressure, we do not expect companies in our sector to outperform the broader markets in 2H24, although individual stock outperformance may continue.</li></ul>

WTR-CMI keeping pace with broad markets. YTD, the S&amp;P 500 has appreciated 18%, compared with the 9.5% appreciation for the broader Russell 2000, while our WTR-CMI Index has improved 8.4%, held back primarily by lithium stocks, which are off anywhere from 37% for ALB to 68% for PLL.Two companies in our index, RYAM and ECL, have outperformed even the tech-heavy S&amp;P 500, coming off a challenging 2023.Unfortunately, with both lithium and ag markets still under pressure, we do not expect companies in our sector to outperform the broader markets in 2H24, although individual stock outperformance may continue.

Mat-Chem Notes Caution - Canada Rail Strike, Weakening Ag-Chem Market, and Slower EV Adoption

<ul><li>Heavy lithium. Halfway through the year, the S&amp;P 500 has appreciated 15.4% YTD, driven by the strong performance of the Magnificent Seven, even as the remaining 490+ companies saw their stock prices move more in line with the Russell 2000, which itself posted an 7.8% gain YTD.</li><li>Over the same timeframe, the WTR-CMI Index delivered a disappointing 4.4% gain under the weight of lithium and graphite companies losing 36-62% of their value due to collapsing lithium and synthetic graphite prices, driven by slower growth of EVs and steel production and liquidation of excess inventories by customers, built over the course of 2022-23.</li><li>Sticky costs remain as pricing power wanes. Over the course of 2022-23, many companies experiencing a rapid rise in raw material costs, driven by higher petrochemical prices and rising costs of transportation and logistics aggressively raised prices in an attempt to preserve profits, if not profit margins. </li></ul>

Heavy lithium. Halfway through the year, the S&amp;P 500 has appreciated 15.4% YTD, driven by the strong performance of the Magnificent Seven, even as the remaining 490+ companies saw their stock prices move more in line with the Russell 2000, which itself posted an 7.8% gain YTD.Over the same timeframe, the WTR-CMI Index delivered a disappointing 4.4% gain under the weight of lithium and graphite companies losing 36-62% of their value due to collapsing lithium and synthetic graphite prices, driven by slower growth of EVs and steel production and liquidation of excess inventories by customers, built over the course of 2022-23.Sticky costs remain as pricing power wanes. Over the course of 2022-23, many companies experiencing a rapid rise in raw material costs, driven by higher petrochemical prices and rising costs of transportation and logistics aggressively raised prices in an attempt to preserve profits, if not profit margins. 

Mat-Chem Notes - Between a Rock and a Hard Place - 2H24 Outlook

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>Valvoline's performance in the second quarter of fiscal 2024 demonstrates robust growth and operational efficiency.</li><li>The company showed an impressive growth trajectory with system-wide store sales increasing by 13% to $746 million.</li><li>The expansion was complemented by a significant rise in profitability, evidenced by a 21% increase in adjusted EBITDA to $105 million and a notable jump in adjusted earnings per share (EPS), which increased over 60% to $0.37 per share.</li></ul>

Valvoline's performance in the second quarter of fiscal 2024 demonstrates robust growth and operational efficiency.The company showed an impressive growth trajectory with system-wide store sales increasing by 13% to $746 million.The expansion was complemented by a significant rise in profitability, evidenced by a 21% increase in adjusted EBITDA to $105 million and a notable jump in adjusted earnings per share (EPS), which increased over 60% to $0.37 per share.

Valvoline Inc.: A Tale Of Enhanced Service Portfolio and Innovation! - Major Drivers

Podcast by Andrew Walker, a PM at Rangeley Capital, Yet Another Value Podcast

Yet Another Value Podcast

Podcast by Andrew Walker, a PM at Rangeley Capital

Yet Another Value Podcast is a new podcast from Andrew Walker, the founder of yetanothervalueblog.substack.com/. We interview top investors and dive deep into stocks and companies they are currently working on and investing in. While nothing on this channel is investing advice and everyone should do their own diligence, our goal is to frequently feature edgy and actionable value and/or event driven ideas. Please see our legal and disclaimer at: https://yetanothervalueblog.substack.com/p/legal-and-disclaimer

<ul><li>Valvoline is a vehicle service center focused on quick lube and basic maintenance services.</li><li>They have a new focus as a pure play company after divesting their global products business in 2023.</li><li>The team pitched Valvoline with a price target of $84, representing a 95% price upside and 22% IRR.</li></ul>This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Valvoline is a vehicle service center focused on quick lube and basic maintenance services.They have a new focus as a pure play company after divesting their global products business in 2023.The team pitched Valvoline with a price target of $84, representing a 95% price upside and 22% IRR.This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Pershing Square Challenge 2024 winning team shares pitch on Valvoline $VVV

United States

Valvoline Inc. manufactures and distributes automotive lubricants and chemicals. The Company offers motor oil, additives, antifreeze, brake fluid, and grease products. Valvoline also owns the oil change and express care chains of car repair centers.

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Valvoline (VVV US)

Mat-Chem Notes - Weakness of Industrial, Ag, and EV Markets Leaves Few Options

YTD, the S&P 500, heavily weighted toward tech and internet stocks, has increased 13.4%, while our WTR-CMI Index has increased 7.2%, outperforming...

Water Tower Research

Mat-Chem Notes Caution - Canada Rail Strike, Weakening Ag-Chem Market, and Slower EV Adoption

Unfortunately, with both lithium and ag markets still under pressure, we do not expect companies in our sector to outperform the broader markets in...

Water Tower Research

Mat-Chem Notes - Between a Rock and a Hard Place - 2H24 Outlook

Over the same timeframe, the WTR-CMI Index delivered a disappointing 4.4% gain under the weight of lithium and graphite companies losing 36-62% of...

Water Tower Research

Valvoline Inc.: A Tale Of Enhanced Service Portfolio and Innovation! - Major Drivers

Valvoline's performance in the second quarter of fiscal 2024 demonstrates robust growth and operational efficiency. The company showed an...

Baptista Research

Pershing Square Challenge 2024 winning team shares pitch on Valvoline $VVV

Valvoline is a vehicle service center operator and franchisor focusing on quick lube and maintenance services, with a recent divestment of its...

Yet Another Value Podcast

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